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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
CIA No.86 of 2006
BETWEEN:
RJ (BOB) HALL, BRANCH MANAGER of
ELA MOTORS, MT. HAGEN
First Appellant
AND:
TOYOTA TSUSHO (PNG) LIMITED trading as
ELA MOTORS
Second Appellant
AND:
LEO NELSON BALUS
Respondent
Mt Hagen: David, J
2012: 19 October
PRACTICE & PROCEDURE – appeal from order of District Court – application to set aside ex parte judgment - first application struck out for want of prosecution - merits of application considered - second application struck out in the absence of parties – second application considered as an abuse of process – appeal to be allowed only if it appears to the Court that substantial miscarriage of justice has occurred – appeal allowed – District Courts Act, Sections 25,143, 146, 152 & 230.
Cases cited:
Commodity Development Pty Ltd v Peter Karai [1994] PNGLR 463
Leo Hannet & Anor v ANZ Banking Group (PNG) Ltd (1996) SC505
Grace Lome v Allan Kundi (2004) N2776
Albert Areng v Gregory Babia (2005) N2895
Albert Areng v Gregory Babia (2005) N2928
Kutubu Transport Limited v Peter Yoyo, App.101 of 2002, Unreported & Unnumbered Judgment delivered in Mt. Hagen on 16 January 2007
Stephen Ambo v Phillip Ame (2012) SC 1195
Counsel:
Koeya J. Peri, for the appellants
Peter Kak, for the Respondent
JUDGMENT
19 October, 2012
1. DAVID J: INTRODUCTION: This is a decision on an appeal instituted by the appellants by notice of appeal filed on 20 May 2006 against the decision of the Mt. Hagen District Court constituted by His Worship, Mr. Mark Pupaka made on 20 April 2006 ordering that the appellants' notice of motion filed on 22 March 2006 seeking an order to set aside the ex-parte order made on 23 February 2006 be struck out.
2. At the hearing of the appeal, no issue was raised by the Respondent as to the competency of the appeal.
3. The parties filed written submissions and amplified them with their oral submissions. I have considered them.
BACKGROUND
4. On 2 March 2005, the Respondent commenced proceedings against the appellants in the Mt. Hagen District Court by Complaint No.17 of 2005 supported by an ordinary Summons to a Person Upon a Complaint. The matter was made returnable on 6 April 2005 at 9:30 am. Copies of the complaint and summons appear at pages 10 to 13 of the Appeal Book. The Respondent claimed that his motor vehicle, a white Toyota Land Cruiser utility with engine number 1HZ0033537 and bearing registration number HAC 692 (the motor vehicle) which was initially purchased by one Donald Yaki from the Second Appellant through the First Appellant as the Branch Manager and agent of the Second Appellant on 31 December 2003 and then re-sold by Donald Yaki to the Respondent on 3 February 2004 was impounded by police from Minj on 10 December 2004 because they suspected that there was something irregular about the motor vehicle in so far as the engine and chassis numbers were concerned and then brought the motor vehicle to the premises of the Second Appellant for verification with the Second Appellant's sales records. The motor vehicle was returned to the Respondent after the Second Appellant admitted supplying the wrong engine number when it sold the motor vehicle to Donald Yaki.
5. The Respondent claimed that the police impounded the motor vehicle as a result of the appellants negligently supplying incorrect details of the motor vehicle when it sold it to Donald Yaki. The motor vehicle was kept at the premises of the Second Appellant for a period of 20 days from 10 December 2004 to 31 December 2004 (the period of detention).
6. The Respondent further claimed that he suffered loss and damage in the sum of K8,000.00 for loss of business during the period of detention calculated at a daily rate of K400.00 which was the amount he would charge for the hire of the motor vehicle together with interest and costs of the proceedings.
7. On 14 March 2005, the appellants through Warner Shand Lawyers, Mt. Hagen filed a notice of intention to defend the proceedings. A copy of the notice appears at pages 14 and 15 of the Appeal Book.
8. On 22 March 2005, the appellants filed their defence. A copy of the defence appears at pages 16 to 18 and 42 to 44 of the Appeal Book. The appellants denied liability on the basis that; first, except that the First Appellant was the Branch Manager, he could not be sued in his personal capacity; second, although the Second Appellant may have sold the motor vehicle to one Donald Yaki, they did not know and could not admit the claim; and third, police impounded the motor vehicle and brought it to their premises so the Respondent's cause of action, if any, lay against the State.
9. On 28 April 2005, the appellants filed a notice of motion seeking an order to dismiss the entire proceedings. A copy of the motion appears at pages 19 to 20 of the Appeal Book. The application was supported by the Affidavit of Robert Hall, the First Appellant sworn on 26 April 2005 and filed on 28 April 2005 and the Affidavit of Service of Koeya J. Peri sworn and filed on 28 April 2005. Copies of these affidavits appear at pages 21 to 26 of the Appeal Book. In the affidavit evidence, the appellants asserted that the proceedings did not disclose any reasonable cause of action against them or that they were frivolous or vexatious therefore ripe for dismissal.
10. The depositions show that the matter was adjourned about 8 times since it first returned before the District Court on 6 April 2005 either because of administrative reasons affecting operations of the Mt. Hagen District Court or that the parties did not appear either in person or through their lawyers in the case of the appellants. The last adjournment was made on 10 November 2005 to a date which cannot be clearly ascertained from the depositions for an ex-parte hearing.
11. On 29 November 2005, the District Court constituted by His Worship, Casper Koi after conducting a hearing ex parte, entered judgment in favour of the Respondent in the sum of K8,000.00 plus interest at the rate of 8% and costs and ordered that the judgment be settled within two weeks of service of the order upon the appellants (the ex parte judgment). The presiding magistrate essentially observed that the appellants had no defence to the Respondent's claim going by the defence filed which he said was so brief and lacking supporting documents therefore rendered insignificant. Copies of the typed and hand-written decision appear at pages 67 to 74, 86 to 91 and 101 to 110 of the Appeal Book respectively. The Respondent relied on his Affidavit in Support filed on 22 November 2005 at the ex parte hearing which appears at pages 61 to 65 and 92 to 100 of the Appeal Book.
12. The appellants' notice of motion filed on 28 April 2005 was not dealt with or determined by the District Court it seems from the depositions prior to the entering of the ex parte judgment.
13. On 10 January 2006, the appellants filed a notice of motion seeking an order to set aside the ex parte judgment. A copy of the notice of motion appears at pages 27 and 28 of the Appeal Book. This motion was made returnable on 25 January 2006 at 9:30 am. The application was supported by the Affidavit in Support of Notice of Motion of Koeya J. Peri sworn on 10 January 2006 and filed on 12 January 2006 and the Supplementary Affidavit of Koeya J. Peri sworn and filed on 12 January 2006. Copies of those affidavits appear at pages 29 to 44 of the Appeal Book. In Mr. Peri's Affidavit in Support of Notice of Motion sworn on 10 January 2006 and filed on 12 January 2006, he sought leave to rely on the Affidavit of Robert Hall sworn on 28 April 2005 to support the application and also referred to the defence filed. The Respondent filed his Affidavit in Response sworn and filed on 24 January 2006 in rebuttal.
14. According to the District Court Civil Work Sheet recording proceedings of 25 January 2006, a copy of which appears at page 118 of the Appeal Book, only the Respondent appeared in person. The notice of motion was then adjourned for hearing on 8 February 2006.
15. There is no official record of the proceedings of 8 February 2006 in the Appeal Book.
16. However, according to the District Court Civil Work Sheet recording proceedings of 23 February 2006, a copy of which appears at page 75 of the Appeal Book, the notice of motion was listed to be dealt with that day. Only the Respondent appeared in person before the District Court constituted by His Worship, Mr. Mark Pupaka. The appellants did not appear either in person or by their legal representatives so the notice of motion was struck out with costs awarded to the Respondent and the ex parte judgment was confirmed: see the minute of the relevant order at page 115 of the Appeal Book. The court had noted that that was a completed matter, but was brought before for it through the notice of motion and was not satisfied that the appellants had demonstrated a defence on the merits by the affidavit material they had filed.
17. On 22 March 2006, the appellants filed a notice of motion seeking orders to set aside the order made ex parte on 23 February 2006 and to reinstate the notice of Motion filed on 10 January 2006. The notice of motion was made returnable on 10 April 2006. A copy of the notice of motion appears at pages 45 and 46 of the Appeal Book. This motion was supported by the Affidavit in Support of Notice of Motion of Koeya J. Peri sworn on 21 March 2006 and filed on 22 March 2006 and the Affidavit in Support of Notice of Motion of Robert Hall sworn and filed on 6 April 2006. Copies of these affidavits appear at pages 47 to 49 and 55 to 60 of the Appeal Book.
18. According to the District Court Civil Worksheet recording proceedings of 10 April 2006, a copy of which appears at page 117 of the Appeal Book, both parties appeared before the court that day. The Respondent appeared in person while the appellants were represented by Mr. Yallon from Warner Shand Lawyers. The matter was then adjourned to 13 April 2006.
19. According to the same District Court Civil Worksheet which also records proceedings of 13 April 2006, only the appellants appeared before the court that day through Mr. Peri from Warner Shand Lawyers. The notice of motion was further adjourned to 20 April 2006 for hearing.
20. On 20 April 2006, the District Court constituted by His Worship, Mr. Mark Pupaka struck out the notice of motion for abuse of process of the court as His Worship considered that the motion sought similar reliefs as the one which was struck out previously which it found was considered on its merits. According to the District Court Civil Work Sheet for 20 April 2006, a copy of which appears at page 116 of the Appeal Book, none of the parties appeared.
GROUNDS OF APPEAL
21. The grounds of appeal contained in the notice of appeal are:
"1. The court erred in law in striking out the Notice of Motion filed on the 22nd of March 2006 when the application had defence on merits, it was filed within a reasonable time, and that there was an explanation as to why judgment was allowed to be entered ex-parte.
2. The court erred in fact in striking out the Notice of Motion filed on the 22nd of March 2006, when no opportunity was given to the Defendants to present or argue their application.
22. At the hearing, the third ground was abandoned.
23. I will discuss the remaining grounds in the following sequence; firstly, grounds 4 and 5 on their own and then followed by grounds 1 and 2 together.
ISSUES
24. The fundamental issue for my consideration and determination of this appeal is whether it appears to me that there has been a substantial miscarriage of justice? This issue emerges from the construction of Section 230 (2) of the District Courts Act which sets out the requirement for allowing appeals from decisions of a District Court. That provision is in the following terms:
"An appeal shall be allowed only if it appears to the National Court that there has been a substantial miscarriage of justice."
25. In determining the fundamental issue, I will need to consider and determine several peripheral issues arising from the remaining grounds of appeal which I will identify during the course of my discussions of the relevant grounds.
GROUND 4: ORDER OF 23 FEBRUARY 2006
Submissions of the appellants
26. The appellants submitted that because the Clerk of Court failed to notify them of the adjourned hearing of their notice of motion filed on 10 January 2006 to 23 February 2006 in accordance with Section 25 of District Courts Act (Ex parte order may be set aside), they were not given any opportunity to prosecute their motion which contravened Section 59 of the Constitution (Principles of natural justice). The order was irregularly entered therefore should be set aside as of right.
Submissions of the Respondent
27. The Respondent on the other hand submitted that the manner in which the ground was framed was an attempt to appeal the District Court order made on 23 February 2006 when the decision actually appealed is that which was made on 20 April 2006. The ground therefore was misconceived or amounted to an abuse of process of the court therefore should be dismissed it was submitted.
Reasons for decision
28. Is this ground misconceived? Subject to my discussion below of the remaining grounds which will in the main touch upon the question as to whether or not the order was final in nature, I accept the Respondent's submission. This appeal concerns the order made by the Mt. Hagen District Court on 20 April 2006 and not that which was made on 23 February 2006. This ground is misconceived. In the circumstance, I will dismiss the ground.
GROUND 5: THE SUBSTANTIVE PROCEEDINGS DID NOT DISCLOSE ANY CAUSE OF ACTION AGAINST THE APPELLANTS
Submissions of the appellants
29. The thrust of the appellants' arguments was that the substantive proceedings did not disclose any reasonable cause of action against them or that they were frivolous or vexatious because the appellants did not sell the motor vehicle to the Respondent, but a third party did. It was further submitted that it followed that the rules as to remoteness absolved them from any liability.
Submissions of the Respondent
30. The Respondent contended that this ground should be dismissed because it was framed as a statement which neither identifies the decision of the District Court appealed nor raises any identifiable error committed by the court.
31. It was further contended that the appellants' argument that the substantive proceedings did not disclose any reasonable cause of action against them or that they were frivolous or vexatious was misconceived on the basis that; first, this was not the subject of any order made by the District Court; and second, their remedy against the entry of the ex-parte judgment was by way of an appeal in the light of the National Court decisions of Grace Lome v Allan Kundi (2004) N2776 (Grace Lome) and Albert Areng v Gregory Babia (2005) N2928 (Albert Areng). It was submitted that since the appellants have not appealed the ex-parte judgment, they must live with the consequences of the manner in which they had conducted their case.
Reasons for decision
32. Is this ground misconceived? I think this ground cannot be raised as a stand-alone one. This stems from the fact that the notice of motion of 22 March 2006 did not specifically raise the matter as a basis for the reliefs sought. Except that the arguments to support this ground may be raised and considered with respect to ground 1 which I will visit and address shortly, as a stand-alone ground, I think it is misconceived and I will therefore dismiss it.
33. I will address the effect of the striking out of the notice of motion of 22 March 2006 in the light of the decisions in Grace Lome and Albert Areng shortly.
GROUNDS 1 & 2: THE COURT ERRED IN FACT AND LAW WHEN IT STRUCK OUT THE MOTION OF 22 MARCH 2006 WHICH HAD MERITS
Submissions of the appellants
34. The appellants' arguments for saying that the District Court fell into error in law and fact when it struck out the motion essentially are:
Submissions of the Respondent
35. The Respondent's contention was that the District Court did not commit an error of law or fact therefore these grounds should be dismissed. His reasons are:
Reasons for decision
36. I must state at the outset that in the discussion of these grounds of appeal, the focus of attention for purposes of addressing and determining these grounds should in the main be on what transpired at the District Court on 20 April 2006 and the effect it had on the appellants' quest to set aside the ex-parte judgment.
37. The first return date fixed for the notice of motion was 10 April 2006. The District Court Civil Work Sheet containing hand written notes of proceedings of 10 April 2006 and 13 April 2006 respectively which appears at page 117 of the Appeal Book demonstrates that on both occasions the appellants were represented by their legal representatives, Warner Shand lawyers. Mr. Yallon of counsel appeared on 10 April 2006 when the motion was adjourned to 13 April 2006 for hearing. On 13 April 2006, Mr. Peri of counsel appeared when the motion was further adjourned to 20 April 2006 again for hearing. According to that worksheet, the Respondent appeared in person on 10 April 2006 and did not appear on 13 April 2006 either in person or by a lawyer.
38. The District Court Civil Work Sheet containing hand written notes of proceedings of 20 April 2006, a copy of which appears at page 116 of the Appeal Book demonstrates that on that occasion, none of the parties was present. The District Court however went on to deal with the notice of motion and struck out the motion. His Worship's written notes or reasons for decision are reproduced verbatim below:
"* There is a notice of motion seeking set aside. It's the same motion previously dealt with. It seems that previous motion was fully dealt with on its merits meaning affidavit filed was considered on its merits and motion was considered.
* Because this may be not permissible as it is, on the face of it, an abuse of process.
Order
39. These grounds raise the question whether the appellants were denied the opportunity to present or argue their application to set aside the ex parte judgment? The intention and purpose of the reliefs sought by the notice of motion was to resurrect the application to set aside the ex parte judgment which was to have been moved through the notice of motion filed on 10 January 2006, but struck out on 23 February 2006.
40. The appellants through their lawyers, Warner Shand were well aware of the motion coming up for hearing on 20 April 2006 as the fixture was confirmed on 13 April 2006 when Mr. Peri was present in court. However, instead of His Worship striking out the matter for want of prosecution only which he was entitled to do in the exercise of his discretion under the circumstances, he justified his decision by stating two, but interrelated reasons I have reproduced above without mentioning want of prosecution as a further basis for his action. First, he observed that the notice of motion was the same as the one previously dealt with on its merits. Second, since the order to strike out the earlier motion was final in nature, the notice of motion was an abuse of process of the court.
41. On the face of the court's record, I see no room for the argument that the appellants were denied the opportunity to present or argue their case on 20 April 2006 when they were well aware of the fixture. The Supreme Court in Stephen Ambo v Phillip Ame (2012) SC 1195 has reaffirmed recently what obligations a litigant has once litigation has commenced in dismissing an application for review of a decision of the National Court for dismissing the substantive proceedings for want of prosecution when both parties were not present in court on the adjourned date following directions hearing. The Supreme Court made these observations:
"We consider that the applicant, as the party who initiated the proceedings, has an obligation to prosecute it with due diligence and dispatch. We also consider that a party to litigation has a two-fold obligation. First and foremost is to the Court and secondly, to the other party or parties. That obligation includes complying with directions and attending directions hearing on dates fixed by the Court. A failure may result in the Court dismissing the proceedings for want of prosecution."
42. The application of the above principle should result in at least the dismissal of ground 2 as without merit.
43. However, I think the proper determination of these two grounds depends on whether or not the court erred in finding that the notice of motion was an abuse of process of the court and that the appellants remedy was by appeal or review?
44. This question cannot however be properly determined without the Court first determining whether or not the order made on 23 February 2006 was final in nature.
45. Following the entry of the ex parte judgment, the appellants through their legal representatives, Warner Shand lawyers filed an application to set aside the judgment through their notice of motion filed on 10 January 2006. The appellants were entitled to file such an application under Section 25 of the District Courts Act because the ex parte judgment by its very nature was made following an ex parte hearing conducted pursuant to Section 143 of the District Courts Act.
46. Section 25 of the District Courts Act states:
"A conviction or order made when one party does not appear may be set aside on application to the Court on such terms as to costs or otherwise as the Court thinks just, and the Court, on service on the other party of such reasonable notice as the Court directs, may—
(a) proceed to hear and determine the information or complaint in respect of which the conviction or order was made; or
(b) adjourn the hearing and determination of the hearing to such time and place as it thinks fit and direct such notice of the adjourned hearing as it thinks fit to be given to a party."
47. Section 143 of the District Courts Act states:
"Where, in the case of a complaint, the defendant does not appear at the place and at the time specified in the summons, or at the place and time to which the hearing was adjourned or postponed, as the case may be, if—
(a) it appears to the Court on oath that—
(i) the summons was duly served at least 72 hours before the time appointed in the summons for appearing; or
(ii) an order for substituted or other service or for the substitution for service of notice by advertisement or otherwise was duly complied with; and
(b) no sufficient grounds are shown for an adjournment,
the Court may proceed ex parte to hear and determine the complaint or may adjourn the hearing to a future day."
48. The proper considerations that apply in an application to set aside an ex parte order pursuant to Section 25 of the District Courts Act were considered in Commodity Development Pty Ltd v Peter Karai [1994] PNGLR 463. These are:
1. there must be an affidavit stating facts showing a defence on the merits.
2. there must be a reasonable explanation why judgment was allowed to go by default; and
3. the application must be made promptly and within a reasonable time.
49. I am satisfied that the affidavit material produced by the appellants to support their motion generally meet these requirements.
50. As I have mentioned already, the application to set aside the ex parte judgment was struck out on 23 February 2006. The District Court Civil Worksheet recording proceedings of 23 February 2006 shows that on the date of the hearing, the Respondent was present, but the appellants were not present either in person or through their lawyers. The court dealt with and struck out the notice of motion in the absence of the appellants. To my mind, it was an ex parte order that could be challenged under Section 25 of the District Courts Act and that was exactly what the appellants did. I took a similar view in Kutubu Transport Limited.
51. As I have mentioned earlier in my discussion of ground 5, the Respondent has relied on the decisions in Grace Lome and Albert Areng to argue that since the appellants have failed to challenge the ex parte judgment by appeal in the first instance rather than opting to invoke Section 25 of the District Courts Act to make the unsuccessful applications to set aside the ex parte judgment, they will have to live with the consequences of the way they had conducted their case. With respect, Grace Lome and Albert Areng can be distinguished from this case. Notably, they involve applications to set aside default judgments entered in proceedings commenced in the National Court.
52. In Grace Lome, the defendants applied to set aside a default judgment entered for damages to be assessed for failing to file their defence in accordance with the National Court Rules. It was conceded that the application was promptly made. However, the application was refused because the defendants failed to; provide an adequate explanation as to why judgment was allowed to be entered by default; and show a defence on the merits.
53. In Albert Areng, the plaintiff commenced proceedings against the First Defendant who was then the Regional Manager of the National Housing Corporation and the Second Defendant, the National Housing Corporation seeking orders that; the title to a property in Madang town be transferred to his father who was the legal purchaser; and that the defendants pay damages for not securing title to the property as a result of the defendants' negligence. The plaintiff obtained default judgment with damages to be assessed. More than a year later, the defendants applied unsuccessfully in a contested application to have the default judgment set aside because it was irregularly entered: see Albert Areng v Gregory Babia (2005) N2895. The defendants contended that the plaintiff lacked standing and that he did not comply with the notice requirements under Section 5 of the Claims By And Against The State Act. The defendants filed another application to set aside the default judgment relying on different grounds than those they had advanced in the earlier application. The application which was contested was dismissed as being res judicata therefore an abuse of the process of the court.
54. As I have mentioned already, the notice of motion was struck out in the absence of the appellants.
55. The order of 23 February 2006 was not final in nature as is envisaged by Sections 146 and 152 of the District Courts Act which could only be challenged under the provisions on appeal regulated by Part XI of the District Courts Act.
56. Section 146 of the District Courts Act states:
"The Court, having heard what each party has to say and the evidence adduced by each, shall consider and determine the whole matter, and shall make an order against the defendant or dismiss the complaint, or make an order against the complainant or dismiss the set-off, as the case requires."
57. Section 152 of the District Courts Act states:
"When a complaint or set-off for a civil debt or damages has been heard and determined by a Court, no action is maintainable in any other court in the country for the recovery of the debt or damages."
58. I consider therefore that the District Court erred in holding that the notice of motion was an abuse of process of the court.
59. I consider these grounds in favour of the appellants.
CONCLUSION
60. I am satisfied that a substantial miscarriage of justice has been done to the appellants. For these reasons, I propose to uphold the appeal under grounds 1 and 2.
ORDERS SOUGHT
61. The formal orders of the Court are:
3. The ex parte judgment made on 29 November 2005 is set aside.
4. The matter is remitted to the Mt. Hagen District Court to be constituted by a different magistrate other than those involved in the entry of the ex parte judgment and the order the subject of this appeal for hearing.
5. The Respondent shall pay the appellants' costs of the appeal.
_______________________________________________________________
Warner Shand Lawyers: Lawyers for the Appellants
Paulus M Dowa Lawyers: Lawyers for the Respondent
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